The US economy continues to demonstrate resilience, with underlying drivers of consumption supporting retail sales despite a slight miss in expectations. Lower mortgage rates and easing bank-lending conditions for consumer loans are key factors bolstering consumer spending. These dynamics, coupled with the high average duration of US mortgages, have mitigated the impact of Federal Reserve rate hikes, allowing consumption to remain robust even as pandemic savings dwindle. This sustained consumer activity is crucial in maintaining economic momentum and supporting higher yields.
The iShares 20+ Year Treasury Bond ETF (TLT), which focuses on tracking the performance of long-term US Treasury bonds, reflects these broader economic trends. As of 08:51 on January 16, TLT is priced at $86.43, slightly down from its last close of $86.76. The ETF's performance is influenced by the ongoing support for retail sales and the resulting impact on yields, highlighting the complex interplay between consumer behavior and bond markets.